Can Cognizant's Collaboration With McDonald's Push the Stock Higher?

Core Insights - Cognizant Technology Solutions (CTSH) has extended its partnership with McDonald's (MCD) for several years, focusing on innovation through advanced technologies to enhance staff enablement, customer experience, and operational efficiency [1][2] Group 1: Partnership and Collaboration - The renewed agreement with McDonald's emphasizes both companies' commitment to driving innovation in the food services industry [1] - Cognizant will leverage its expertise in Cloud, Enterprise AI, Generative AI, and digital engineering to support McDonald's in key enterprise areas [2] Group 2: Business Growth and Clientele - Cognizant is experiencing growth due to an expanding clientele and a strong partner base, with a favorable mix of business renewals and new opportunities expected to drive prospects in 2025 [3] - In Q3 2024, Cognizant signed six deals exceeding $100 million each, totaling 19 large deals in 2024, surpassing the 17 deals secured in 2023 [3][4] Group 3: Strategic Partnerships - Cognizant's partner base includes notable companies such as CrowdStrike, Zscaler, ServiceNow, IBM, Palo Alto Networks, NVIDIA, and Amazon, which are expected to enhance its prospects [4] - A strategic partnership with CrowdStrike aims to improve enterprise security transformation using the AI-native Falcon cybersecurity platform [4][5] - The partnership with Zscaler focuses on transforming security posture with an AI-enabled zero-trust cloud security platform [5] Group 4: AI Advancements - Cognizant has significantly invested in AI, committing$1 billion to enhance its platforms and capabilities, including Cognizant Neuro and Flowsource [6] - The launch of the Neuro AI Multi-Agent Accelerator and Multi-Agent Service Suite in January 2025 aims to help businesses adopt AI agents for improved operations and customer experiences [7] Group 5: Financial Performance and Estimates - The Zacks Consensus Estimate for Cognizant's 2025 revenues is $21.02 billion, indicating a year-over-year growth of 6.62$4.97 per share, reflecting a year-over-year increase of 6.58% [9] Group 6: Valuation and Market Performance - Cognizant shares are considered undervalued with a Value Score of B, and the forward 12-month Price/Sales ratio stands at 1.84, lower than the industry's 7 [10] - Over the past six months, Cognizant shares have gained 6.2%, slightly underperforming the broader Zacks Computer & Technology sector's return of 6.6% [10]